Shadow Chancellor Remarks - Event in Cambridge

The Shadow Chancellor makes a brief set of remarks at an event hosting technology entrepreneuers

Today, I'm proposing a new innovation to support people who are struggling to save.

We know that a lot of people in Britain have very few, if any, material savings.

Those that do have savings tend to have a disproportionate amount of wealth locked into cash, which means they’re not getting significant interest returns.

My proposal is to launch a government-backed payment system which rounds credit and debit card transactions up to the nearest pound, investing the surplus payment automatically in a guaranteed savings ISA.

Savers would then be able to choose whether to subscribe to an investment service to manage the fund as it grew, or to keep the savings in cash.

The average card transaction is worth £8.57, and the average household spends over £500 a week.”

So by rounding your transactions up to the nearest pound, the average household could save about £25 a week, putting that money into a secure savings ISA or choosing to invest it, for example in shares.

Over the course of a year, just by adding no more than 99 pence on to every transaction, you could automatically build up a savings nest egg of over £1,000. I think that’s potentially life changing for families who have no savings to speak of at the moment.

We’d need to make it quite an easy option to opt into and out of, but I’m confident that the technological capability of central government is sufficient to deliver an effective system.

But I think it’s an innovation that could be transformative for many people. I’ll be asking for a meeting with the Chancellor to discuss implementation.

The media don't quite know what to make of this statement, and so most coverage is restricted to the business and technology pages. The Times thinks it sounds like a good way to nudge people into saving. Left-leaning commentators wonder to what extent there's a real benefit: who are these families who don't already have savings but can afford to let £1,000 a year slip down a hole?

The specialist banking press worry about how long such an ability would take to be integrated into the UK's current payments infrastructure, and what it would cost to do so. Fintech media sees it as a clearly solvable, and thus marketable, problem.